You know the economy is having a tough time of it if Johnson & Johnson (NYSE:JNJ) is feeling its effects. This may come as a surprise to many investors who are quick to assume that no company is being spared from the recession.

IN PICTURES: Learn To Invest In 10 Steps

While it looks like Johnson & Johnson may have a slower year in 2009, what will surprise most investors about Johnson & Johnson is the exact opposite. Every investor worth his salt should hold this company in high regard.
Numbers Don't Lie
While it appears that Johnson & Johnson will experience a sales decline in 2009, it will be the first for the company in 76 years. If profits decline, that will be the first such decline in 25 years. This is an unbelievable track record, and one that unequivocally proves that JNJ can weather the worst of economic storms.

Johnson & Johnson also has an compounded annual growth rate of 10.1 percent over the past 100 years. And at the time, the company was already 23 years old. Even "younger" companies like Procter and Gamble (NYSE:PG), Kraft (NYSE:KFT), and Kellogg's (NYSE:K), all of which sell a wide array of consumer staples, can't touch this record. It's simply phenomenal, and is one of the most overlooked facts in business to the masses. (For more, see A Guide To Consumer Staples.)

Follow the Smart Money
However, many of best investors are well aware of the company's outstanding performance. Warren Buffett's Berkshire Hathaway (NYSE: BRK.A, BRK-B) owns it. The "Buffett of Canada," Prem Watsa at Fairfax Financial (NYSE:FFH) owns a lot of it.

So, what have all these extraordinary numbers meant? For one, JNJ easily outperformed the market in 2008. But one year doesn't mean much. This does: a single share bought in 1944 at $37.50, when the company went public, assuming reinvested dividends, the value today would be approximately $900,000, an annual compound return of 17% over 64 years.

It's not Over
While the future returns of JNJ simply can not match the last six decades of performance, the company is in a very sweet spot today because its products have unlimited growth potential. JNJ is just now really penetrating China and India, and with products like Tylenol, Band-Aids, and baby shampoo, the opportunities are endless. And with a dividend yield of 3.5% and a payout that's as assured as anything in business, the company can easily reward investors.

Simple, but Not Easy
Warren Buffett has often remarked that investing is "simple, but not easy." It's simple in that you only need to find a few great companies to do well over time. It's not easy because many want to get rich quick. Find great businesses like JNJ, and you will do exceedingly well over time. (For more, see Riding The Bear Market Into A Bull Market.)

Related Articles
  1. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Stock Analysis

    What Exactly Does Warren Buffett Own?

    Learn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
  4. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  5. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  6. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  7. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  8. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  9. Stock Analysis

    Yelp: Can it Regain its Losses in 2016? (YELP)

    Yelp investors have had reason to be happy recently. Will the good spirits last?
  10. Stock Analysis

    Is Walmart's Rally Sustainable? (WMT)

    Walmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do interest rates increase during a recession?

    Interest rates rarely increase during a recession. Actually, the opposite tends to happen; as the economy contracts, interest ... Read Full Answer >>
  3. What are the risks of annuities in a recession?

    Annuities come in several forms, the two most common being fixed annuities and variable annuities. During a recession, variable ... Read Full Answer >>
  4. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  5. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  6. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>

You May Also Like

Trading Center